The former chairman of the Co-op bank Paul Flowers stepped down from a charity
over a series of alleged false expense claims amounting to a "significant
sum", it emerged last night

Disgraced former banking chief Paul Flowers quit his post on the board of a drugs charity after being investigated over £150,000 of alleged false expenses, it was claimed last night.

The former Co-op Bank chairman, who is currently being investigated by police over claims he bought and used illegal drugs, was suspended as chairman of the trustees at the Lifeline Project over a “significant” number of alleged false claims made between 1992 and 2004.

The charity, which helps people overcome drug and alcohol addiction, launched an investigation into Flowers’ behaviour but he quit his role before it reported its findings.

The Manchester-based organisation’s chief executive Ian Wardle said the “lengthy and thorough” investigation’s conclusions were passed on to the Charity Commission but it is believed no further action was taken.

This is just the latest in a series of damaging revelations about Flowers, who was suspended from the Labour party and the Methodist Church after the Mail on Sunday published footage of him allegedly buying crack cocaine and crystal meth last weekend.

It has now emerged he stepped down as a Labour councillor in Bradford two years ago after “inappropriate content” was found on his computer.

He was also convicted of gross indecency in a public toilet with a man in 1981 but was forgiven by the Methodist Church.

The alleged expenses fiddling scandal will fuel criticism of financial regulators and the Co-op board for approving Flowers’ promotion to the chairman of the bank.

George Osborne has ordered an independent inquiry into how Flowers was deemed suitable for the top post despite having no previous banking experience.

There is also mounting pressure on Ed Miliband to explain his relationship with the Methodist minister as it emerged that Labour had received more than £18million ‘soft loans’ from the Co-op Bank at a 4 per cent interest rate well below the 5.6 per cent the organisation was offering to regular customers.

Documents submitted to the Electoral Commission suggest the Co-op has been keeping the Labour party afloat for years with generous loans and overdraft facilities.

Two loans of £1.2million were made to Labour by the Co-op and Unity Trust banks just weeks after a meeting between Flowers and Miliband earlier this year.

Flowers home was searched by police

The Co-op now needs a £1.5billion injection of cash to help it overcome financial difficulties caused by ban loans after its takeover of the Britannia Building Society in 2009.